Remarks by Angel Gurría, delivered at the press conference following the OECD-FAO high level meeting

OECD Paris, 6 May 2009

Mr. Diouf, Delegates to the OECD-FAO High Level Meeting, Representatives of the Press:

One year ago, almost to the day, I sat here together with Jacques Diouf to discuss the OECD-FAO Agricultural Outlook. Those were days of soaring commodity prices which placed the issues of poverty, hunger and malnutrition squarely at the centre of international attention. Well, a year has passed and these issues are still at that very centre of our concerns, but with a stronger sense of urgency.

World food insecurity has reached unprecedented levels in the past couple of years, with extreme poverty and hunger increasing in 2007 and 2008 as a result of high food prices. These prices have come down a lot, but they are still higher (on average) than in the early years of this decade. The situation is expected to deteriorate further in 2009.

The current financial and economic crisis is having a particularly strong impact on the poorest households. The combined effect of the global credit crunch, falling international trade and investment flows, lower remittances and the effect of budgetary pressures in donor countries’ aid plans, are reversing the progress we had made in combating global poverty and are pushing more people into hunger.

Important emergency measures are being taken to ensure that more people have access to food immediately; these actions are clearly necessary. But we also need to address a number of medium and longer term issues if we really want to eradicate hunger, if we really want to build a stronger, fairer and cleaner global economy.

Let me point at three key aspects that have been constantly underlined in this high level meeting: ODA, trade policies, and domestic policies.

1. Official Development Aid

It is an accepted fact that there has been under-investment in developing countries’ agriculture in the last two decades. Now that the food crisis has resulted in an increase of aid to agriculture pledged by donors, it is of crucial importance that this aid flows more quickly and is put to the best possible use.

The Paris Declaration of Principles on Aid Effectiveness provides guidance, but it appears that implementing these principles is more complex in agriculture than in other sectors such as health or education. This is because agriculture spans the portfolios of many Ministries and reaches across many different policy areas, making the design of effective sector-wide approaches very difficult.

Donor countries must help in the consolidation of comprehensive sectorial approaches, including the set-up of agricultural innovation systems, which connect the knowledge generated in universities, national research institutes, and extension services with knowledge nurtured and held by farmers themselves. This remains one of the central challenges in developing countries.

At the country level, donors, collectively, should support agreed frameworks, such as the Comprehensive Africa Agriculture Development Programme (CAADP), owned and driven by African countries. At the global level, donors should support the Global Partnership for Agriculture, Food Security and Nutrition to share knowledge and policy experience to improve the global food security system. The OECD will actively take part in, and share its expertise with, the High Level Panel of Experts on Food Security.

But hunger is also a trade policy issue.

2. Trade policy

Food accessibility is too often hampered by measures that restrict trade. Such measures continue in place, even though experience in recent decades has demonstrated that increased market openness can contribute to economic growth and to poverty reduction.

In OECD countries and many leading emerging economies, agricultural trade barriers and other trade-distorting practices remain fertile ground for further reform. As long as such barriers exist, they limit the incentive for farm households to increase supply in response to growing market demand, and thereby hinder development.

Global food security will only be realised if agricultural markets are more open, so that competitive suppliers around the world are able to respond to growing global demand. Markets need to be kept open internationally, so that the adjustment to future price swings will be spread globally, more efficiently, and at lower cost.

At the same time, it is clear that not all developing countries are able to capitalise fully on the economic potential from increased openness in the global economy. Therefore, donor countries and their partners have established a particular focus on Aid-For-Trade in recent years as part of Official Development Assistance (e.g. WTO/OECD Aid for Trade initiative).

My last point is related to the importance of a supportive domestic policy environment.

3. The crucial role of domestic policies

Effective agriculture policies will favour dynamic agricultural sectors if supported by a broader set of policies that favour competitiveness and productivity. Experience, both inside and outside the OECD area, shows that governments can best support agriculture development through measures that focus on specific priorities, such as provision of needed physical infrastructure, establishment of effective R&D systems, effective food inspection services, extension and advisory services, incentives for sustainable use of soil and water resources, and so on.

While agriculture and trade policies are important, the wider political, social and economic framework that would stimulate overall development, raise incomes, and reduce poverty also warrants attention. In many cases, poverty is the underlying cause of food insecurity, and policies to improve the purchasing power of poor households through broad based economic development are essential.

Let me conclude by stressing that food security is not only about solving the urgency in the short term; it is also about addressing the urgency of the long term. The long term challenge ─ how to ensure food security for 9 billion people in 2050 ─ has also become urgent now.

This global economic crisis is a wake-up call; an opportunity to bring about a new market economy that is driven by global human progress and sustainable economic growth. This OECD-FAO meeting is a step in that direction.

Jacques Diouf, the FAO, and the UN system generally are well placed to address immediate needs; OECD has much to contribute to the definition of medium-term needs that have been the focus of this meeting’s discussion. We are proud and happy to work side by side with the FAO in this endeavour.